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ACCOUNTING POLICY
Reporting of business combinations
Volvo applies IFRS 3, Business Combinations, for acquisitions. All business
combinations are accounted for in accordance with the purchase method.
Volvo values acquired identifiable assets, tangible and intangible, and lia-
bilities at fair value. Any surplus amount from the purchase price, possible
non-controlling interests and fair value of previously held equity interests
at the acquisition date compared to the Group’s share of acquired net
assets is reported as goodwill. Any lesser amount, known as negative
goodwill, is recognized in profit and loss.
In step acquisitions, a business combination occurs only on the date
control is achieved, which is the point when goodwill is calculated. Trans-
actions with the minority are recognized as equity as long as control of the
subsidiary is retained. For each business combination, Volvo decides
whether the non-controlling interest should be valued at fair value or at
the non-controlling interest’s proportionate share of the net assets of the
acquiree. All acquisition-related costs are expensed. Companies acquired
during the year are consolidated as of the date of acquisition. Companies
that have been divested are included in the consolidated financial state-
ments up to and including the date of divestment.
Non-current assets held for sale and discontinued operations
Volvo applies IFRS 5, Non-current Assets Held for Sale and Discontinued
Operations. The standard also includes the treatment of current assets. In
a global group like the Volvo Goup, processes are continuously ongoing
regarding the sale of assets or groups of assets at minor values. In cases
in which the criteria for being classified as a non-current asset held for
sale are fulfilled and the asset or group of assets is not of minor value, the
asset or group of assets and the related liabilities are recognized on a
separate line in the balance sheet. The asset or group of assets are tested
for impairment and, if impaired, measured at fair value after deductions for
selling expenses. The balance sheet items and the income effect result-
ing from the revaluation to fair value less selling expenses are normally
recognized in the segment Group headquarter functions and other, until
the sale is completed and the result attributed to each segment.
ACQUISITIONS AND DIVESTMENTS OF SHARES IN SUBSIDIARIES
3
NOTE
AB Volvo’s holding of shares in subsidiaries as of December 31, 2011
is shown in the disclosures of AB Volvo’s holding of shares in Note 5.
Significant acquisitions, formations and divestments within the Group
are listed below.
Acquisitions for the period
The Volvo Group has not made any acquisitions during 2010 and 2011,
which solely or jointly have had a significant impact on the Volvo Group’s
financial statements. For acquisitions in 2010 and 2011, the fair-value
adjustments to the acquisition balance sheets have thus not been signifi-
cant for the Volvo Group.
The impact on the Volvo Group’s balance sheet and cash-flow state-
ment in connection with the acquisition of subsidiaries and other business
units are specified in the following table based on valuations on the
respective acquisition dates:
Acquisitions 2011 2010
Intangible assets 1 0
Property, plant and equipment 132 32
Assets under operating lease 1,503 468
Inventories 38 56
Current receivables 236 99
Cash and cash equivalents 39 15
Other assets 1 12
Minority interests 387 20
Provisions (36) (22)
Loans (1,510) (374)
Current liabilities (191) (143)
600 163
Goodwill 967 52
Acquired net assets 1,567 215
Cash and cash equivalents paid (1,567) (229)
Cash and cash equivalents according to
acquisition analysis 39 15
Effect on Group cash and cash
equivalents (1,528) (214)
Divestments
The Volvo Group has not made any divestments during 2011, which solely
or jointly have had a significant impact on the Volvo Group’s financial
statements. Comparative figures for 2010 include the divestment of Volvo
Aero’s US subsidiary, Volvo Aero Services (VAS) and Volvo CE’s distribution
networks in Turkey and Russia.
The impact on the Volvo Group’s balance sheet and cash-flow statement
in connection with the divestment of subsidiaries and other business units
are specified in the following table:
NOTES TO FINANCIAL STATEMENTS
FINANCIAL INFORMATION 2011
84